In every business relationship there is the potential for conflict over contractual agreements or business operations. When such conflicts arise, there is no need to incur the onerous expense and delays involved in traditional litigation. There are readily available alternative dispute resolution procedures that will enable you to resolve your disputes relatively quickly, fairly and cost-effectively.

Resolving international disputes demands special skills, experience and cultural sensitivity. That’s why thousands of attorneys and their clients turn to JAMS. We are a recognized leader in cross-border mediations and arbitrations, with resources wherever you or your clients do business.

Colleges and universities need to manage, resolve and prevent conflict. As a worldwide leader in dispute resolution, JAMS is singularly qualified to provide a comprehensive range of unique and effective solutions for problems facing students, faculty and administration.

The JAMS ADR blog serves to engage our clients, the legal community and the public in a discussion about alternative dispute resolution. As leaders in mediation, arbitration and more, we strive to remain at the forefront of legal developments, trends and news in areas of law that pertain to ADR.

International commercial arbitration is one of the fastest-growing practices at JAMS. With industry leading rules, JAMS is praised for a highly experienced panel with specialties in many key areas, multilingual case management capabilities, and unparalleled service. JAMS specializes in the resolution of international disputes and is one of the largest providers of commercial arbitration in the world.

JAMS ADR Blog

The Kinkade Case, Or How Not to Conduct an Arbitration

April 17, 2013

While all arbitrators aim for the highest level of quality control, errors occur. Sometimes these errors are pretty egregious, which is why we always recommend using a trusted and well-respected ADR provider and arbitrator.

In a recent case coming out of Michigan, the Thomas Kinkade art company alleged that one of its dealers failed to pay for art it received. The dealer counterclaimed that Kinkade had fraudulently induced it to enter the dealership agreement. The matter went to arbitration where the dealer chose an arbitrator, Kinkade chose an arbitrator and the two arbitrators chose a third. The court opinion noted “Per the arbitration rules, each party was entitled to appoint one arbitrator, who would de facto advocate that party’s position on the panel.” In this system, most people refer to the appointed arbitrators as “party arbitrators” and the third as the “neutral arbitrator.”

Despite years of delays, the matter was finally in arbitration when Kinkade discovered that the dealer had hired the third arbitrator’s law firm to do a large batch of business, and the dealer’s arbitrator had done the same. Kinkade was facing two arbitrators doing business with each other and with the dealer.

Kinkade asked the arbitrator to withdraw. He refused. Kinkade asked the arbitral organization overseeing the matter to disqualify him. They refused.

The arbitral panel closed proceedings and then sua sponte asked for documents that the dealer had told Kinkade “do not exist.” The dealer provided 8,800 pages of business records to the arbitrators but not to Kinkade. The panel noted in an interim award that no one was entitled to attorney’s fees.

The panel made a final award giving the dealer $1.4 million, including nearly $500,000 in fees and costs.

The Sixth Circuit found an arbitrator committed both transgressions, and affirmed the district court’s decision to vacate the resulting arbitration award.

On appeal, the courts said this was about the most egregious example of “evident partiality” that they had ever seen. Compounding this was the fact that the dealer’s law firm had switched lawyers several times – once because counsel had been convicted of tax fraud.

While the courts can fix things like this – and they did – it’s clearly a better course to avoid doing business with a bad arbitrator in the first place. The vast majority of arbitrators and organizations do the right thing in nearly every case, but it’s that rare case – like this one – that keeps us all on our toes.

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The JAMS ADR blog serves to engage our clients, the legal community and the public in a discussion about alternative dispute resolution. As leaders in mediation, arbitration and more, we strive to remain at the forefront of legal developments, trends and news in areas of law that pertain to ADR.

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This website is not a solicitation for business. All content on the JAMS website is intended to provide general information about JAMS and an opportunity for interested persons to contact JAMS. The content of this website is not offered as legal advice or legal opinion and it should not be relied upon for any specific situation. JAMS neutrals are not engaged in the practice of law and no attorney client relationship is intended. This website is for informational purposes only and does not constitute a complete description of JAMS services. While JAMS endeavors to keep the information updated and correct, JAMS makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, or reliability of the information contained in this website. See More